Changing Identity: Retiring from Unemployment
Free University of Berlin (FUB)
University of Magdeburg - Institute of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute)
affiliation not provided to SSRN
September 1, 2011
Using data from the German Socio-Economic Panel from 1984-2009, we follow persons from their working life into their retirement years and find that, on average, employed people maintain their life satisfaction upon retirement, while long-term unemployed people report a substantial increase in their life satisfaction when they retire. These results are robust to controlling for changes in other life circumstances and suggest that retiring is associated with a switch in the relevant social norms that causes an increase in identity utility for the formerly unemployed. This is supportive of the idea that, by including identity in the utility function, results from the empirical life satisfaction literature can be reconciled with the economic theory of individual utility.
Number of Pages in PDF File: 31
Keywords: life satisfaction, retirement, unemployment, identity, social norm
JEL Classification: I31, J26
Date posted: September 23, 2011
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